ASX Market Wrap: ASX 200 Rebounds 1% as Middle East Tensions Thaw; Woolworths and Tuas Lead Surge

Key Highlights

• ASX 200 jumps 1% as ceasefire hopes ease global market nerves
• Woolworths climbs more than 4% as investors rotate into defensive stocks
• Tuas rallies nearly 24% in one of the market’s strongest recoveries this year
• Northern Minerals remains under pressure after Canberra orders forced divestments
• Oil prices retreat, but Brent crude still trades near US$110 a barrel

ASX rebounds as geopolitical fears cool

Australian shares pushed higher on Tuesday as signs of easing tensions in the Middle East sparked a broad relief rally across global markets.

The S&P/ASX 200 climbed 1% to 8,590 by mid-afternoon trade, recovering much of Monday’s heavy selling. The All Ordinaries rose 0.89%, while the ASX All Technology Index added almost 1%.

Commodities Snapshot | Source: MarketIndex 

Overnight, Wall Street delivered a mixed lead. The Dow Jones gained 0.32%, while the Nasdaq slipped 0.51% as investors continued trimming high-growth technology exposure amid elevated interest rates.

Markets found support after Donald Trump flagged “serious negotiations” in the Middle East, alongside reports pointing to a fragile ceasefire path. Brent crude fell 1.92% to US$109.94 a barrel, although energy prices remain historically elevated as shipping disruptions around the Strait of Hormuz continue to strain supply chains.

The Australian dollar weakened 0.39% to 71.41 US cents.

ASX Sector Snapshot | Source: MarketIndex 

Defensive sectors drive the recovery

Tuesday’s rally carried a noticeably defensive tone.

Consumer staples led the market higher, surging 3.3%, while telecommunications rose 2.36% and financials gained 1.89%. Real estate stocks also bounced as bargain hunters returned following last week’s budget-driven selloff.

Materials remained weaker, falling 0.35%, while information technology slipped 0.91%.

The rotation reflects a market still wrestling with the aftershocks of the Albanese government’s 2026-27 Budget, particularly changes to capital gains taxation and discretionary trust structures.

AMP chief economist Shane Oliver said the tax overhaul may redirect capital away from speculative growth assets and property-driven investment strategies.

“The tax changes announced in the Budget are likely to drive an increased focus on higher-yielding investments at the expense of those more focused on capital growth,” Oliver said.

He described the Budget as “the most consequential for investors in years”.

Woolworths and Tuas lead the charge

Among the major gainers, Woolworths Group (ASX: WOW) climbed 4.37% to $34.42 despite no major corporate announcement.

The supermarket giant appeared to benefit from a broader flight toward stable earnings and defensive cash flow as inflation concerns linger.

Transport costs, fuel surcharges and rising food supply pressures continue dominating economic discussions. Analysts are warning Australia’s wheat harvest could shrink sharply this season amid El Niño risks and soaring fertiliser costs.

Tuas Ltd (ASX: TUA) delivered the standout move of the session, jumping 23.57% to $2.805 as buyers piled back into the stock after Monday’s sharp selloff.

Domino’s Pizza Enterprises (ASX: DMP) gained 4.63%, while QBE Insurance (ASX: QBE) rose 4.49% as financials and insurers regained momentum.

The ASX 200 Banks Index climbed 1.81%.

Northern Minerals becomes the market’s geopolitical flashpoint

While the broader market steadied, Northern Minerals (ASX: NTU) remained at the centre of intense attention after the Federal Treasurer ordered six foreign-linked investors to divest a combined 17.58% stake in the company.

The forced sale affects approximately 1.67 billion shares and follows a Treasury investigation into alleged breaches under the Foreign Acquisitions and Takeovers Act.

Treasury documents revealed authorities uncovered a covert stake-building attempt linked to Hong Kong Ying Tak, which allegedly accumulated 361.5 million shares despite previous disposal orders.

The market is now assessing the impact of such a large volume of stock potentially entering the market before the July 2 deadline.

Northern Minerals owns the Browns Range project in Western Australia, a significant source of dysprosium and terbium, two heavy rare earth elements used in electric vehicles, advanced magnets, robotics and defence systems.

The case has reinforced how critical minerals are increasingly being treated as strategic national infrastructure rather than conventional mining assets.

Miners and defence names lose momentum

The easing of geopolitical tensions also triggered a pullback across several defensive and commodity-linked stocks.

WA1 Resources (ASX: WA1) fell 6.69% to $13.67, while Predictive Discovery (ASX: PDI) dropped 7.18%.

Droneshield (ASX: DRO), one of the market’s strongest performers during the recent Middle East escalation, slid 5.11% as traders reduced exposure to defence-linked momentum plays.

Gold also softened, with spot prices easing 0.46% to US$4,546 an ounce.

Inflation fears still linger beneath the rally

Despite Tuesday’s rebound, concerns around inflation and consumer pricing remain firmly in focus.

Reserve Bank chief economist Sarah Hunter warned inflation expectations remain a critical risk for policymakers.

“If businesses and households expect high future inflation, this can become a self-fulfilling prophecy,” Hunter said.

“Bringing expectations back down may require a more substantial slowing of economic activity, as we saw during the early 1990s recession.”

Meanwhile, Westpac’s Matthew Hassan pointed to an emerging divide in consumer sentiment across generations.

Younger Australians appear more optimistic about the economic outlook, while older demographics remain deeply cautious amid housing, tax and retirement concerns.

The ASX volatility index remained subdued at 13.6, suggesting traders expect calmer conditions in the near term, even as markets continue balancing geopolitical uncertainty, inflation pressures and a rapidly shifting investment landscape.